Managing the Complexity of Large, Capital-Intensive Projects

Phil Wales, CEO, eBusiness Strategies

Leo Sayavedra, Principal, eBusiness Strategies

Apr/May 10

Although most major companies have project management guidelines, savvy project managers, and proven processes, it's not a mystery that a staggering 30 percent of large, capital-intensive project costs are wasted.

Industry experts say this problem is not baffling at all. Well-honed processes for logistics, regulatory compliance, risk management, and contractor management are nothing new. However, because large projects are constantly exposed to new information, documents, and ideas, the communications process meets a predictable "overload, crash, and burn" fate. While many companies have stringent capital project governance models to reduce project risk, many models may actually increase risk. By considering a blizzard of decision preparations, compliance processes, and project documents for management to validate, most governance models are excessively time-consuming and complex.

Still, most companies lack ways to integrate project disciplines and to manage the project team's complex information flow. Due to this void, project managers feel attacked from all sides by matters both weighty and trivial. Good ideas get lost. Emails and voice messages get misplaced. A structured collaboration solution - or a way to order the chaos and make the team efficient - is needed. The solution should embed templates within carefully considered work processes, where team members can share freshly updated project information.

Structured Collaboration
Taking back that 30 percent loss requires adopting two key management concepts. First, that structured collaboration can encourage a better decision-making process by automatically delivering the latest, accurate information to project employees and contractors. Second, that well-designed collaboration allows for flexible standardization, which increases efficiency. Specific work is standardized, but with enough flexibility to accommodate changes that can critically affect a project. That might include a key contractor going out of business, or new government regulations that increase the cost of compliance. The system provides sufficient standardization to streamline work, but permits flexibility for team members to respond to changing project conditions.

Project managers have long harnessed technology to share project information. Yet the misconception persists that merely sharing the information boosts efficiency. On the contrary, sharing must occur within a structured framework that locates and distributes the correct information when the proper people need it.

Similarly, crafting a new approach does not mean abandoning existing technology and buying new hardware and software. Most companies already have some in-house collaboration technology. (Consider the ubiquity of Microsoft's SharePoint.) Instead of buying new technology, companies usually only need to enable existing platforms to increase efficiency. This includes eliminating project "noise" by prioritizing their governance models' practices and standardizing them so they can be measured, controlled, and optimized. Managers can then focus on critical issues while spending less time reducing distractions.

Prioritize, Align, and Enable
To implement structured collaboration, companies should follow three simple steps: First, prioritize what to integrate. Second, streamline information sources so everyone sees the same version. And third, embed standardized methods and templates into work processes for consistency.

The objective should be to give decision-makers critical information in an intuitive environment. Additionally, the infrastructure should enable project personnel to adjust their work methods, thus increasing their productivity. By establishing a "pay as you go" work environment, management can assure that personnel are not overwhelmed to meet the next deadline.

Structured collaboration intends to create a new, interdisciplinary work environment. Remember when all project team members worked on the same floor and gathered in person to review key project deliverables? Today, with project teams scattered from Dubai to Houston, that environment seems as quaint as Abe Lincoln studying by candlelight. When the Internet allowed project teams to work together virtually, most companies got on board. Portals let team members across the globe assess, work, and review documents at any time.

But without a well-designed and intuitive solution, collaboration platforms provide untapped capabilities. Solutions include features that stress simplicity and easy access to critical information. These solutions should provide low support costs and simplified training to give the highest project benefits.

Collaboration Solutions
Besides ease of use, enforcing best practices must be a top priority. This requires a flexible workflow engine that can standardize controls and document templates embedded in project business processes. Key features include linking output documents to specific workflow steps to ensure the correct sequence is followed, as well as ensuring compliance with governance models. Workflow can give the project manager a quick way to track progress. A centralized data management repository gives team members one location to search and includes all document versions, which is vital for continuously updated documents.

This collaboration does not require upgrading technology systems or redesigning already functional processes. Instead, it leverages existing technology and automates information access and current practices so project teams can make better decisions.

How does one implement structured collaboration? First, determine what should change. Start by identifying existing, effective management practices. The goal is to preserve functioning practices and jettison inefficient methods by delineating requirements, developing an approach, and executing the collaboration solution.

Target the "low hanging fruit" when delineating requirements, or the most relevant opportunities for improving project risk management and efficiency. Simultaneously, determine the weakest points of process and communications, and delineate the workflow, or process documentation, and access to critical information or remote data.

A company's size and projects will determine its solution development. A $50 billion company with five to 10 capital projects each year faces a different situation than a $5 billion company with one annual project. But the opportunities and risks are comparable. Be careful to avoid the commonly made mistake of understanding collaboration solutions only technologically and thinking, "Let's just turn it over to the IT department." Technology is an enabler, not the solution. Solution development should focus on automating the project team's best practices. Whomever drives the collaboration solution often determines success or failure.

Finally, execute these solutions when it will benefit the project team without overloading them with unnecessary overhead burden. Solutions add no value if not used, and systems are not used if they don't add real value. Successful solution execution requires an active dose of change management. Even positive change often meets resistance, simply because it is new. So implementing a well-defined change management program that considers both technical and business components is critical.

Structured Collaboration Benefits
While every organization must identify its own benefits from enabling collaboration, turning risk mitigation into dollars is a universal opportunity. Reversing that 30 percent project cost loss is the top benefit. Secondly, companies can handle additional or larger projects without adding employees with a well-designed collaboration platform. Other benefits include increased accountability against project milestones, identifying project roadblocks sooner, transparent audit trails, embedded governance reducing manual and haphazard compliance, immediate access to correct information, and quickly on-boarding new project members. Overall, a structured collaboration program makes everyone's job easier and more productive, and enables the company to increase profits.

In today's constrained financial environment, there must be a shift in managing large, capital-intensive projects. Not following a structured collaboration with user-friendly technology and embedded best practices reduces the chances of eliminating that 30 percent deadweight. Yesterday's business model of a static project team using manual-intensive progress tracking and hit-or-miss project risk management is history. Today's capital-intensive projects are almost always virtual. Too many people working in far-flung places on information that must be instantly available cannot work any other way.

eBusiness Strategies (ebiz-strategy.com) is based in Houston, Texas.

Phil Wales, CEO, eBusiness Strategies

Phil Wales has more than 30 years of experience consulting for some of the world’s largest corporations. He specializes in applying creative e-business solutions for corporate infrastructure, focusing on real estate and facilities management. He is the founder of eBusiness Strategies, and is a registered architect in the state of Texas.

Leo Sayavedra, Principal, eBusiness Strategies

Leo Sayavedra has twenty years of management and technology consulting experience. He specializes in strategy, business and project development, operations improvement, and unlocking value from technology. Past clients include energy utilities, national and international oil companies, Fortune 100 companies, and governments. Mr. Sayavedra holds a bachelor’s degree from the University of Texas at Austin and an M.B.A. from Georgetown.